Investment Firms Pay Record $45 Billion for Utility Group

Texas Pacific Group and Kohlberg Kravis Roberts buy TXU.

Texas Pacific Group and Kohlberg Kravis Roberts announced on Feb. 26 the biggest-ever acquisition by investment funds with the purchase for of U.S. utility group TXU for $45 billion A joint announcement said that the price included allowance for debt of about $12 billion, and represented a premium of 25% on the average price of TXU shares over 20 days to February 22. TXU shareholders would be offered $69.25 per share.

The consortium acquiring TXU also involves investment bank Goldman Sachs and several other financial institutions.

The statement said that "the newly privatized company will deliver price cuts and price protection benefits to electric customers" and would also strengthen environmental policies and make significant investments in alternative energy.

The deal marks a new record in a sharply rising trend for takeovers by private equity firms. Such takeovers by investment funds are causing concern both among regulatory authorities and employees of companies in Europe.

The size of the deal exceeds the previous record for deals concluded by investment funds which was the purchase by Blackstone for $39 billion of property group Equity Office Properties Trust.

The value of acquisitions of companies by investment funds reached a record total throughout the world of nearly $600 billion in 2006, up 70% from $350 billion in 2005.

Copyright Agence France-Presse, 2007

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